On behalf of the appellant, the cause was submitted on
the briefs of Daniel W. Morse of Morse & Shiller, Ltd., of
Mequon, WI.

Respondent

ATTORNEYS:

On behalf of the respondents, the cause was submitted on
the brief of Vicki S. Schaut, of Milwaukee, WI.

2003 WI App 157

COURT OF APPEALS

DECISION

DATED AND FILED

June 10, 2003

Cornelia G. Clark

Clerk of Court of Appeals

NOTICE

This opinion is subject to
further editing.If published, the
official version will appear in the bound volume of the Official
Reports.

A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals.SeeWis. Stat. § 808.10 and Rule 809.62.

Appeal No.

02-3260

Cir. Ct. No.01
PR 02439

STATE OF WISCONSIN

IN COURT OF
APPEALS

In the Matter of the Estate of

Audrey R. Schmitz, Deceased:

Mary Klauser,

Appellant,

v.

Robert Schmitz, John Schmitz,

Paul Schmitz, Matthew Schmitz,

Michael Schmitz, and Michelle

Schmitz,

Respondents.

APPEAL
from an order of the circuit court for Milwaukee County:Kitty
k. brennan, Judge.Reversed.

Before Wedemeyer, P.J., Fine and Schudson, JJ.

¶1SCHUDSON, J.Mary
Klauser appeals from the circuit court order granting the objection to her
appointment as personal representative of the estate of her mother, Audrey R.
Schmitz, and appointing Attorney Brian F. McElligott in her place.Klauser argues that the court erred in
concluding that, under Wis. Stat. § 856.23(1)(e)
(2001-02)[1],
she was “unsuitable” to act as personal representative due to her possible
conflict of interest with the estate regarding assets she and her mother held
jointly.Klauser is correct and,
therefore, we reverse.

I.
BACKGROUND

¶2For many years preceding her death, Audrey
Schmitz lived next door to her daughter, Mary Klauser, ultimately relying on
her for various services and aspects of daily care.A little more than one year before her death, Mrs. Schmitz placed
a checking account and a savings account (both of which had previously been in
her and her husband’s names and, following his death, in her name alone) in her
and Klauser’s names, jointly.Mrs.
Schmitz’s will designated Klauser as personal representative of the
estate.

¶3Mrs. Schmitz’s will was admitted to probate
without objection.Following the filing
of the application for approval of the personal representative, however, six of
Mrs. Schmitz’s beneficiaries—Robert, John, Paul, Matthew, Michael, and Michelle
Schmitz—objected to Klauser’s appointment, claiming that she was improperly
excluding the joint accounts as well as other assets from the estate.As a result, the circuit court appointed
Attorney Brian F. McElligott as special administrator for the purpose of
determining which assets should be subject to probate.[2]Attorney McElligott issued a report
concluding that the checking account and savings account, jointly held in the
names of Audrey Schmitz and Klauser, should be included in the estate.He reached his conclusion based on what he
believed was Mrs. Schmitz’s limited competency at the time Klauser’s name was
added to the accounts.His report also
suggested that the circumstances surrounding the issuance of “several large
checks … be further investigated.”

¶4When Klauser continued to seek approval of
her appointment as personal representative, the circuit court held a hearing on
the Schmitzs’ objection.Klauser
testified that despite Attorney McElligott’s assessment of the bank accounts,
she would exclude them from the estate.She explained, “[M]y mother had said she wanted me … to eventually get
those.”Due to Klauser’s concession of
her intention to exclude the accounts, the court found that her personal
interests conflicted with her duties as personal representative.Therefore, the court disqualified Klauser as
personal representative and appointed Attorney McElligott in her place.

II.
DISCUSSION

¶5Klauser argues that the circuit court erred
in disqualifying her as the personal representative of her mother’s
estate.She contends that her mother’s
wishes should be honored and that, under Wis.
Stat. § 856.23(1)(e), her asserted stake in the two bank accounts
did not render her “unsuitable” to serve as personal representative.We agree.

¶6Wisconsin
Stat. § 856.23 sets forth the bases on which a person may be
disqualified from serving as the personal representative of an estate.[3]The parties agree that the only basis
relevant to this case is § 856.23(1)(e), which provides that the
designated personal representative may be disqualified if he or she is:“A person whom the court considers
unsuitable for good cause shown.” Thus, in this case, the issue simply is
whether the circuit court erred in concluding that Klauser was “unsuitable for
good cause shown.”[4]

¶7Although “[t]here must be a measure of
discretion in determining whether the particular conflict of interest is
serious enough to prevent appointment or compel removal” of a personal
representative, see Keske v. Marshall & Ilsley Bank, 18 Wis.
2d 47, 55, 117 N.W.2d 575 (1962), a circuit court’s discretion to disqualify a
personal representative is limited.As
the supreme court explained in 1942:

“It may therefore
be stated as a general rule that the person named as executor in a will is
entitled to qualify, unless by reason of his mental condition or some legal
disability he is prevented from acting as executor.The subject is now regulated by statute in most jurisdictions,
which in some instances have modified this general rule.The principle still prevails that no
discretion is vested in courts with respect to refusing to grant letters
testamentary to the persons nominated in a will, unless such persons are
expressly disqualified, or unless such discretion is vested by law.The statutes [throughout the United States]
are, in the main, broadly inclusive as to the persons qualified to act as
executors and have been liberally interpreted by the courts to carry out the
expressed wishes of testators with regard to the persons who should administer
their estates.”

¶8Since the enactment of the probate code in
1969, our courts have not considered whether a personal representative is
“unsuitable for good cause shown” because of a possible conflict of interest
with the estate regarding the ownership of certain assets.Approaching that issue, however, we begin by
acknowledging our supreme court’s declarations, offered repeatedly many years
ago, of an unwavering principle: “It has ever been the policy of the law of
[Wisconsin] that every citizen making a will has the right to select according
to his own judgment the person or persons whom he would have execute it.”Svacina, 239 Wis. at 442.Indeed, “[e]xcept for very cogent reasons
the courts follow the maxim[,] ‘Whom the testator will trust so will the
law.’”Holzhauer, 183
Wis. at 512.

¶9More recently, and most significantly for purposes
of this appeal, the supreme court, interpreting “unsuitable for good cause
shown,” declared that “a nominee may not be disqualified from serving as
personal representative except upon grounds which pertain to the nominee’s
capacity or competence to conduct the business of the estate.”Skow, 91 Wis. 2d at 782.Further, the supreme court clarified that
“unsuitable for good cause shown” is not a broad standard under which courts
would “question the judgment of the testator and inquire into the makeup of
the estate, the desires of the beneficiaries or heirs, comparative costs,
the credentials of those desiring to be appointed personal representative, and
the relative ‘suitability’ of those candidates seeking to be appointed personal
representative.”Id. at
781 (emphasis added).

¶10Here, the circuit court found Klauser
unsuitable to serve as personal representative not because of any failure of
“capacity or competence to conduct the business of the estate,” see id.
at 782,but, rather, due to what the
court viewed as the conflict between her interests and those of the
estate.Thus, the court disqualified
Klauser for what Skow specified as an inappropriate basis—a
question about Klauser’s judgment regarding “the makeup of the estate.”Id. at 781.Such a question or potential conflict,
however, may be as commonplace as the countless situations in which a deceased
jointly-titled assets to the very person entrusted with responsibility under a
will.Indeed, such “conflict[s] of interests
in some cases may not be serious,” and may not warrant disqualification,
particularly where they “have been known to the testator at the time of the
execution of the will and may not have been regarded by [the testator] as an
obstacle to the choice made.”Holzhauer,
183 Wis. at 511; see also Svacina, 239 Wis. at 445-46 (executrix
should not have been disqualified based on her possible indebtedness to the
estate, partly because the indebtedness “was known by the mother at the time
she made her will”); Oak Park Trust & Sav. Bank v. Tressing,
86 Wis. 2d 502, 516, 273 N.W.2d 271 (1979) (widow’s conflict of interest with
estate did not preclude her designation as joint executor where “[n]othing in
the record … establishe[d] that [she] would not administer the estate
fairly”).

It is well established as a
general rule that the fact that a testamentary nominee as executor has a
personal interest or standing which is adverse or antagonistic to that of the
decedent’s estate or the beneficiaries thereof is not to be deemed a
disqualification for appointment as such, in the absence of a statute so
providing or investing the court with discretion to refuse the appointment for
such cause.

¶12Nevertheless, the Schmitzs argue that “a finding of
unsuitability is not limited solely to concerns of incapacity or
incompetency.”And they are
correct.Given the myriad circumstances
in which conflicts of interests may arise, we acknowledge, as the supreme court
noted, that “[a] conflicting personal interest preventing an executor or
administrator from doing his duty renders him unsuitable.”Keske, 18 Wis. 2d at 52
(emphasis added).The supreme court
explained:

A serious
conflict between one’s personal interest and an important duty of a personal
representative may render adequate performance of that duty impossible.The situation may be one which [sic] the
testator could not have foreseen.The
particular duty may require immediate performance.The difficulty with the traditional definition of “legally
competent” is that it appears to exclude this type of situation as a proper
basis for refusal to appoint.It leads
to the absurdity that the court might be required to appoint an executor which
[sic] it should immediately remove.

Id. at
55.Thus, the Schmitzs correctly
contend that “[i]f a nominated personal representative has a personal interest
which prevents her from performing a duty as executor, the court should refuse
the appointment.”

¶13Here, however, the Schmitzs failed to establish that
Klauser had such a “personal interest.”They did not establish that her claimed right to the bank accounts
prevented her from doing her duty as personal representative.The mere fact that she disagrees with them
about whether certain assets, jointly held in her name, should be included in
the estate does not establish her incapacity or incompetency.

¶14Moreover, our statutes provide the framework for
addressing such disagreements.Under Wis. Stat. § 858.09, a court, on
its own motion or “at the request of any person interested in the estate … may
examine the personal representative” to determine whether an asset should be
included in or excluded from an estate.[5]See alsoWis. Stat. § 862.13.[6]Thus, a court can address concerns related
to possible conflicts of interests and, where appropriate, require that
accounts, like those here, be included in an estate.Significantly, however, a court can do so without disturbing the
decedent’s designation of a personal representative.

¶15Thus, our statutes provide for the logical separation of
two very distinct issues:whether the
personal representative designated by the deceased should be disqualified; and
whether certain property claimed by the personal representative should be
included in the estate.Here, although
the circuit court displayed commendable concern about Klauser’s possible conflict
of interest, it found her “unsuitable” for a reason beyond the reach of Wis. Stat. § 856.23(1)(e), as
interpreted by Skow, and disqualified Klauser despite her lawful
designation by her mother.

By
the Court.—Order reversed.

[1] All
references to the Wisconsin Statutes are to the 2001-02 version unless
otherwise noted.

[2] The
order appointing Attorney McElligott as special administrator was entered by
Judge Elsa C. Lamelas.The order
challenged on appeal was entered by Judge Kitty K. Brennan.

Persons who
are disqualified.(1) A person
including the person named in the will to act as personal representative is not
entitled to receive letters if the person is any of the following:

(a)Under
18 years of age.

(b)Of
unsound mind.

(c)A
corporation not authorized to act as a fiduciary in this state.

(d)A
nonresident of this state who has not appointed a resident agent to accept
service of process in all actions or proceedings with respect to the estate and
filed the appointment with the court.

(e)A
person whom the court considers unsuitable for good cause shown.

(2) Nonresidency may
be a sufficient cause for nonappointment or removal of a person in the court’s
discretion.

[4] The
parties offer some discussion comparing “disqualif[ication]” of a personal
representative under Wis. Stat. § 856.23,
to “remov[al]” of a personal representative under Wis. Stat. § 857.15.They agree, however, that the dispositive issue in this appeal is
whether Klauser was “unsuitable for good cause shown,” under § 856.23(1)(e),
and they rely on case law involving each of the two statutes (or predecessor
versions) and terms.In this decision,
therefore, we need not address any possible distinction between these statutory
standards, and we also draw from the case law they cite.

Inventory,
certification, examination in court.The
personal representative shall certify under oath that the inventory, to the
best of the personal representative’s knowledge, includes all property,
encumbrances, liens or charges required to be shown therein.The court, at the request of any person
interested in the estate or the property listed or on its own motion, may
examine the personal representative on oath in relation thereto or in relation
to any proposed addition thereto or deletion therefrom.

[6]Wisconsin Stat. § 862.13 states: “Objections
to account.At the hearing on an
account of a personal representative or at any time prior thereto, any person
interested may file objections to any item or omission in the account.All such objections shall be specific.”